If Inflation's Everywhere, How the Fed Raises Rates in 2022?

20. Jan. 2022

Quite a lot of inflationary data was published yesterday. Prices in the UK grew at the highest rate in the last 30 years (5.4% on CPI). Similar figures for Canada - consumer prices rose by 4.8%. As a result, US Treasury yields continue to rise as markets discount for the tightening of the Fed's monetary policy. In addition, Germany's 10-year bond yield rose above zero for the first time since May 2019.

Against the backdrop of such data, analysts continue to compete, who is more, in the competition of how many times the Fed will raise the rate in 2022. Anna Wong, chief economist at Bloomberg Economics, is in the lead and expects five increases of 25 basis points for the year (March, June, July, September and December). At the same time, some traders are even talking about a 50 basis point increase in March.

Given that oil prices are not yet thinking of falling (the International Energy Agency in its latest report released yesterday raised its consumption forecast by 200,000 barrels per day, plus a fire on the pipeline from Iraq to Turkey, which increased fears about the already tense short-term supply outlook) and corporate costs continue to rise, there are all grounds for further inflation growth.

In general, it is not surprising that the US stock market is under pressure, and Nasdaq Vera officially moved into correction territory, losing 10%.

An interesting indirect sign in favor of further price cuts. Back in late October, Robinhood was the 9th most popular free investment app on the Apple App Store, according to Sensortower. Now it has dropped to 19th. Coinbase was #1 at the end of October. Currently, it is at number 5. That is, interest is falling and there will be less and less fresh meat.